Thursday, November 22, 2012

In the modern world, paper money is not just an ever disappearing aspect of the economy, it is a very limited monetary unit. You can't use cash to make online purchases. Checks are only secure enough to use to pay bills to trusted companies. The same is true of most bank bill-pay programs. Cash is easy to steal and rarely traceable. Credit cards, on the other hand, offer the ability to carry high amounts of purchasing power with you wherever you go with very limited personal risk. Just as importantly, cards are the primary online and international purchasing medium in the global economy.

Cash Pitfalls

While many people take security in owning cash, it has many limitations in the modern world. For one, inflation and currency fluctuations can quickly impact the value of the cash you carry. A greater concern is that cash makes you a target because it is easy to steal and a liquid asset for quick disposal by definition. For this reason, you should only carry cash in limited quantities. Yet, large purchases must be made from time to time.

Another problem with cash is that in its pure form it can only be used for local purchases. Local purchases are still preferable for many types of items, but most people are finding the savings and and wide product selection offered online often make online purchases preferable to local purchases. Without a credit card, you are essentially squeezed out of the global market place.

Other Payment Options

Checks can in rare situations be used for online purchases, and can be used to pay for most items with a later billing date. More and more local stores are phasing out the acceptance of checks because it is so easy to write fraudulent checks. What's bad for consumers is that the routing numbers included on every check can be used to drain a bank account. In this sense, using checks can be more dangerous than cash, in that cash liability is limited only to what you carry.

To a large extent, you can use debit cards in place of credit cards and checks. However, debit cards carry similar, but even greater risk than checks. There are few regulations protecting funds withdrawn using stolen debit card information. Further, few banks have extensive debit card protection policies. Debit cards may be the riskiest of all purchasing mediums.

Credit Card Liability Limitation

Credit cards avoid nearly all of the financial risks associated with carrying cash. They also avoid the risks involved with using either paper or electronic bank drafts, more commonly referred to as checks and electronic checks and debit cards. Federal laws restrict liability for most types of card theft to only $50, while states may provide further liability restrictions and creditors often waive any of the liability remaining. In other words, if someone uses your card or card information without your authorization, the worst case scenario is that you lose $50.

Credit cards often offer far more extensive fraud protection than just credit card theft. If a seller doesn't provide you with exactly what you ordered or charges more to your card than what was quoted, you can challenge the charge with your finance company. If you have kept your receipts and can provide some proof of what has happened, you'll usually get your money back.

Many credit cards now come with varying degrees of product quality protection. For example, some cards will cover booking costs when airlines don't fly the route as purchased, or even insure your belongings should they be lost by an airline. Varying substitutes and insurances are available. The same is true for product purchases, with many cards providing various product quality guarantees that often exceed manufacturer and store guarantees.

Credit cards do something for you that cash currencies and most forms of bank draft don't do: automatic currency conversions. You don't have to find an exchange and buy a currency before making a foreign purchase, so global purchases are greatly simplified. Most credit cards now carry a 3% foreign currency conversion fee, but this is generally at least as reasonable of a rate as you'll get doing a currency exchange at a bank.

Credit cards also offer purchasing power that may be in excess of your assets. In an emergency this can ensure you get what you need. However, this is the most common danger of card use. If you tend to be a compulsive spender, or otherwise financially irresponsible, a card can be a quick means of getting yourself in debt. This is the one reason why credit cards are not the best monetary purchasing medium for all people. If you are one of these people, you should never own a regular card.

There is good news for those who are not responsible credit consumers. Instead of a credit card, you can get what is known as a secured credit card. This type of card limits your purchasing power to the amount of funds you deposit in an account to secure it. You get all of the fraud liability limits of a regular card, while also limiting your liability for bad decisions to the amount of money you have deposited.

Get a Credit Card If You Can

Credit cards are the most secure and convenient monetary purchase medium in wide use today. Whether you make most of your purchases online or locally, you will benefit from the extra security and options provided by using credit cards. If you're not able to be responsible with a line of credit, a secured card provides all of these same benefits. If you are a financially responsible person, you can get all of these benefits provided by the card, plus have extra purchasing power in an emergency situation.

Just a few years ago, fast food chains were not too keen on accepting credit cards. Times have changed, however. Many quick-service restaurants have seen that the trend is inevitable, compelling them to let customers charge their purchases on their plastics. Still, in a world where cash is king, the question remains: should you use your card instead of cash for fast food purchases?

In the past, restaurants accepted only cash, mainly because credit cards required a lengthy processing time, contradicting the fast food concept. Soon enough, technology evolved and card transactions could already be done within a few seconds. According to industry experts, accepting cards instead of cash promotes consumer loyalty. One reason for this is that most people today carry their plastics whenever they intend to spend. Another is the reality that a great number of individuals from other countries use their cards since they do not have cash in local currency with them.

Fast food operators may have also decided to accept the cards because they increase sales. Based on statistics, customers pay more when they utilize credit instead of the good old cash. In addition, there is a prediction that this mode of payment can ultimately reduce the number of staff members needed to take customers' orders.

Three Reasons to Use Cards Instead of Cash

If you are planning to treat your friends or your family for a meal at any fast food chain, your credit card can be a better method of payment than cash. Here are three reasons why:

Safer. How many times have you heard about someone losing their cash? You may have already experienced the same in the past where you may have felt helpless. This does not happen when you lose your card. Whether it is stolen or you misplaced it somewhere, you only need to call your creditor and cancel the card. What's more, if you buy an item and lose it, your card company may even grant you a refund.

Credit History. This is one of the main reasons why people have a credit card. With your card, you can establish a good credit history. As a matter of fact, cards are considered to be the best and most effective way to build credit.

Easy Tracking. Eating in fastfoods can take a big chunk out of your budget. When you use cash, it can be hard to control your spending, especially when you are not able to keep track of it. With credit cards, though, you can keep track of the expenses incurred on fastfoods. This allows you to create a viable budget and stick with it.
Cash still reigns supreme even in today's time. However, no one can deny that credit cards offer numerous benefits. If you have a rewards card, you can even use your credits to pay for your meals and eventually gain rewards. This is something that you can never obtain when you choose cash.

Saturday, November 10, 2012

Making a decision about closing a credit card is part of card debt management. It is true that the more cards you have, the greater the possibility that you will incur debt. However, you should not rush into cancelling your card. There is a principal element that you should never forget: your credit score. Closing an account can negatively affect your credit rating.

Your credit score is what lenders use to determine your interest rates among others. It is comprised of a three digit number and is formally called the FICO score.

The Truth Behind the Myths About Card Cancelation and Credit Scores

There are two popular misconceptions about closing an account. First is that cardholders will be penalized when they have high credit available; thus, it is better to close an unused account. Second is that when a consumer closes an account, everything that's associated with that account will be erased. These two are definitely not true since FICO does not view having too much available credit as a negative attribute. This only becomes a problem if you resort to problematic tactics, such as opening numerous cards to gain high credit limit.

With regard to the elimination of the account history, this is impossible. You can close all the accounts you don't use or they can remain inactive for ten years. All of these pieces of information will remain in your credit report.

Can You Raise Your Score by Closing Your Old Accounts?

The short answer to this question is no. This may seem a little counter-intuitive for you; after all, you are cleaning up your profile by eliminating inactive or old cards. Experts often advise people against canceling accounts, most especially old ones. Fifteen percent of your credit score depends on the length of your credit history. In other words, the longer your account exists, the higher your score can get.

Another thing that you may want to know about is the credit utilization ratio. This is another aspect that the FICO score takes into consideration. Basically, this uses your total available credit versus the total amount you have utilized. Unlike your credit age, the higher the utilization ratio, the lower your score gets. When you close your old or unused card, you are, in essence, wiping out a part of your available credit, thereby, increasing your utilization ratio.

The people at FICO say that there is actually no good reason why you should close an account. The situation may vary, but you will always end up hurting your credit score. However, if you think about it, there are two main benefits that you will get when you close your account. First is that it is beneficial when you have too many cards, such as about half a dozen or more. You get to simplify your life, since it is almost impossible to keep track of your expenses and bills. Second, you reduce the risk of having your old card stolen or utilized by another person without your knowledge.

Wednesday, October 31, 2012

Credit limit reduction is a baffling issue for most cardholders. Sadly, a bank can reduce the permissible limit even without notifying you. Generally, it may happen in two cases - if you have not used your card for few months or your credit score has been poor for several months. The extent of reduction is subject to terms and conditions of the bank.

However, this issue can be dealt with successfully. All you need to do is to follow certain things in this regard. Here are some important things that will help you know reasons behind credit limitations and ideas to fix them.

To begin with, you should contact your bank to know about possible reason behind credit reduction. If it reasons poor credit ratings as a potential factor for the reduction, then you should try fixing them. For this, consult credit bureau agencies and ask for your credit reports.

Generally, the reports detail outstanding balances on your cash card. If they are really worth fixing, consult your bank and explain your financial standing. If there has been increment in your income lately, do mention it to your bank. A growth in income is a surefire way to keep your bank from lowering your credit limit.

Terms and conditions regarding the limit reduction differ from bank to bank. For instance, HDFC Bank reduces the limit, if you may have not used your card for few months. Axis Bank reduces the limit, if the cardholders violate norm regarding good credit standing. This means, if you continue keeping your credit rating poor for several months, the bank may reduce your credit limit up to certain extent.

You should use your card wisely. Do not indulge in overspending. Make sure you are using your cash card at least once in a month. This will convince your bank that your card is being used. The issue of credit reduction does not occur, if the card is used frugally and in needs only.

Why banks lower down credit limit?

Basically, the banks reassess their risk tolerance occasionally. For this, they apply unexplained reductions to maintain their credit card standards. They also impose key terms regarding the reduction. For example, if outstanding balance is not paid on time for several months, the reduction follows. As said before, these terms differ from bank to bank.

So, you should avoid carrying huge outstanding on your card. Do not overspend it. Pay your balance on time. Always keep your credit balance as low as possible. They are some effective ways to avoid facing reduction on your card.

Dinesh Jha has been working as SEO content writer for years. He writes articles on various topics including finance, health subjects, credit and others. He is also freelancing his work as ghost writer for various clients.

Saturday, October 13, 2012

Making purchases on a daily basis is a common form of consumerism that keeps local and global markets at successful levels of health. People often discover that cash flow is difficult to keep up with at various points in time which makes it necessary to use lines of credit and borrowed funds to make any purchase of interest. Consumers that are focused on this effort and need to make adjustments should learn how to improve your credit rating in just three months.

Credit ratings are the numeric indication of how successful a consumer is at managing their debt and paying back their borrowed funds. Lenders focus most heavily on this indication when considering approval decisions in offering additional funds to their applicants. People that suffer from negative scores or wish to simply increase their current ones are often provided with a multitude of helpful suggestions and processes.

Improvement efforts that people consider are often focused on speed and effectiveness. Consumers discover that attempting to increase their overall ratings is much more difficult than they imagined which leads them down the path toward finding the best possible options. The quickest efforts are completed by following several basics steps.

Perhaps the most initial phase of this process should be centered on the ability to retrieve a credit report. A large percentage of consumers are unaware of what is on their reports which leads to confusion as to where they stand within the rating system. Many options are available to receive a copy for free which should be taken advantage of.

Consumers should also consider the idea of hiring a professional to guide their efforts. Many attorneys and debt counseling companies offer tailored programs to help consumers that are attempting to improve their general ratings. Many services offer money back guarantees and highly efficient results.

People should also make sure that issues are corrected immediately. Mistakes are often made by creditors and reporting agencies that significantly impact the numeric rating that has been amassed. The correction of any errors generally leads to a drastic score improvement instantaneously and with very little effort in most cases.

Paying off smaller balances immediately is another common suggestion when learning how to improve your credit rating in only three months. Paying off smaller balances decreases debt to income ratios and helps establish the viewpoint of having the ability to pay. The smaller balances are easier to manage and should be centered in on initially.

Saturday, September 29, 2012

There is no point to plowing your time and money into credit repair if you have outstanding collections. As long as you have past due balances on your credit report your scores will not respond well to your cleanup efforts. On the other hand, if money is no object, you can pursue both at once; negotiate your debt and start the cleanup concurrently. Otherwise, pay your debt first, and then focus on the cleanup.

Question Collections

Debt resolution is vital, but do not throw money at everyone that reports a balance. If an examination of your report reveals multiple collectors for the same account, there is something awry. Redundant collections are prima facie evidence of erroneous reporting and a sure sign your account has changed hands. None but the most recent claimant has a right to your money, or to report the debt to the bureaus. If you pay a collector that does not own the debt, do not be surprised if you get dunned for the same liability in the near future. Dispute prior occurrences of debt and verify accuracy of all collections before parting with your money.

Forget the Inquiries

If you are denied for a loan you will probably receive a denial letter listing the reasons for the turndown, including your recent inquiries. This list should be read with the understanding that the language is the same for everyone and includes factors regardless of the weight they carry. Inquiries have a minimal impact on your FICO scores, and the impact evaporates fast. A hard inquiry will report for two years, but should have zero influence on the calculation of your score within six months. It is helpful to know that you can have unlimited mortgage or auto inquiries in a forty-five day period of time and they count as just one inquiry against your FICO score. If you have other credit issues, focus on them and forget the inquiries; they will fade away before you know it.

Open New Credit Cards Now

Once you have resolved your outstanding debt and are prepared to get your credit repair project into gear, it is time to open a couple of new credit cards. There are two good reasons for this. First, the FICO scoring model puts extra weight on accounts open after a period of bad history, a score bonus you do not want to miss. And second, it takes approximately six months of reporting for new accounts to yield their score increase, so the sooner you start the countdown the better. Also worth noting, if you have no open revolving accounts your credit repair efforts will deliver languid results at best; new accounts are not an option, they are a critical necessity. Secured cards are every bit as good as unsecured, so if your scores are not great just make the small investment in collateralized cards.

Expect Reporting Errors

Consumer credit reporting is not accurate. Your credit report has errors and those errors are limiting your opportunities. There is a possibility this is not true! But if you have been through a bad patch the chance is remote at best. Once your history has been compromised you slip into an unfortunate group of consumers that are statistically prone to multiple reporting failures. Creditor reporting is best when you are in the mainstream and worst when you require special handling which includes everyone that ever had a collection. Examine your reports with a critical eye and dispute inaccuracies with the credit bureaus.

Keep the Faith

If you have the wherewithal to pay your debt you are already close to your goal of great credit. And that goal can be reached sooner than you think. There is no reason you cannot have FICO scores over seven-hundred within six months. All you need to do is take action. The credit system may seem cruel at times, but when you are able to make the right moves you will discover that it welcomes you back with open arms. Good luck!

Thursday, August 30, 2012

A huge advantage with the Internet is the sheer speed with which practically every kind of transaction can be completed. Whether it is to get a home loan, buy a car or seek credit cards, the process can be completed in a matter of minutes. But recent developments have seen access to Chase credit cards slashed to the minimum of time, with applications approved instantly.

Known as the instant approval program, Chase bank is one of two key card issuers in the US - the other is Bank of America - to encourage consumer activity in the economy by removing many of the hurdles that normally make life difficult for applicants. All applicants need to show is that they have a reliable source of income and be over 18.

The purpose is to help qualifying individuals on the road back to financial recovery by offering credit cards that can be properly managed. If cardholders can get to grips with the mistakes of the past, then their future credit rating can be vastly improved too.

Advantages For Applicants

Like all cards, Chase credit cards come with a range of incentives that effectively make using the card less expensive than it seems, and provide a reward scheme from which real discounts can be enjoyed. This is pretty much par for the course when it comes to seeking credit cards, but there are basic incentives that should be expected.

As well as the advantages of being part of an instant approval program, qualifying cardholders benefit through an introductory offer that includes 0% APR and no annual fees. There are also 0% charges on purchases and balance transfers for the first 6 months, though this can sometimes extend to 12 months depending on the card itself.

As with all credit cards, of course, once the introductory offer ends, then APR of as much a 14% is typically charged, which is competitive. And as is always the way, repaying the bill on time vastly reduces the overall cost of the card, so sound card management will save money too.

Other Key Incentives

There are more incentives to enjoy through Chase credit cards. For example, by getting immediate access to a card it all but removes the stress that can come with seeking vital extra funds fast. An emergency bill might need to be paid quickly, and a credit card can provide the much-needed funds in a matter of minutes.

So, through this instant approval program, any additional stress otherwise associated with the application process, is removed. That extra peace of mind is hugely beneficial. But perhaps the most significant advantage that is provided by this program is the opportunity given to bad credit applicants to rebuild their status.

It might seem strange since credit cards are synonymous with bad credit scores and financial problems, but if the cardholders take a mature attitude to using the cards then it provides them with another chance to master the responsibility of handling access to credit sums.

Managing Your Card Maturely

So, is it very difficult to manage your Chase credit card maturely? Actually no. For those cardholders who have suffered real financial hardship at the hands of their cards, the reality is that such problems are down to the spending habits of the cardholder - nothing else. Once this truth is accepted, then it becomes easier to police ones own spending habits.

By taking advantage of the instant approval program from Chase, or from Bank of America, the chance to exercise that self-control is made simple. Usually, some simple rules are applied, like restricting card use to a limited number of specific purposes. For example, maybe use the card only to meet bills on time, and not for shopping. When this kind of plan is adhered to, the benefits of using credit cards become clear very quickly.

Tuesday, August 14, 2012

Many consumers today put their faith in credit cards. For some, the trust is a categorical thing. They pay their bills on time and in full month after month to boost their credit scores. They also use credit cards to reap purchase benefits as part of a rewards program. On the other hand, many are not so credit-savvy; depending on credit cards as an additional source of income, which classically has the opposite effect on a credit score.

Largely, credit cards can be gainful, if used correctly. One feature of credit cards that has abeen misused for long is the balance transfer.

What is Balance Transfer?

This is an incentive offered by credit companies where a customer can transfer existing balances from other cards to a new credit card. This consolidates outstanding debt on several credit cards, thus making it easier to pay off debts with higher interest rates. The flip side? Credit card balance transfers do not come free. Credit card companies usually will allow a balance transfer but charge a transfer fee and other fees for carrying balances over.

Furthermore, the APR on a balance transfer is typically higher than traditional purchases. Many consumers do not realize it because they are usually given a promotional rate that comes with validity. Post promotion, the APR goes way up.

Make Balance Transfer Work!

As cited, balance transfers can be advantageous for those looking to merge debts, making them easier to remove. By removing debts, you can clear out your credit score and reduce your debt-to-income ratio, making it easier to secure financing and better insurance rates in the future. Making one work in your favor is not tough if you stick to a few guidelines.

Number crunching

Before applying, check out the interest rate of the new card. Make sure you are clear on the APR before and after promotion, so there are no shockers later. Check against several cards. It may not be worth it if the fees are higher than you can afford to pay.

Budget

Remember you will need to contain all applicable fees in addition to your total debt to get an accurate number. In correlation to the ending date of the lower interest rate, you need to prepare a plan that will coincide with paying off the total balance before the promotional APR expires. Or else you are just totaling more debt onto your shoulders. If you cannot create a plan for paying off the full balance in the allotted time period, a balance transfer is not a practicable option for you even if it promotional rate is 0%. If you don't do that math, the chances are good you are not making a financially-savvy move.

Debts

Never do a balance transfer without a sincere commitment to eliminating your credit card debt. Treat this as your one chance to pay less for reducing debt. If your plan for eliminating the balance in the promotional time frame, you need to dedicate all available cash to ensure that happens, even if it means finding a source of complementary income to expedite the process.

Tuesday, July 31, 2012

The last ones are the most appealing from the consumer's point of view, as they offer quite nonstandard terms, compared to the traditional banks. The differences between these institutions are enormous. Generally speaking, the following specific features of the services they offer can be sorted out in the following way:

Amount of the loan

Depending on what amount of money you need to borrow, you should think of the choice of a loan institution. Traditional banks offer big amount, while smaller companies are limited to a small size of the loan portfolio. It seldom exceeds $300 000 in total for all the borrowers.

Terms of lending

Banks themselves are quite a steady business. They plan their activities for many years ahead. Long-term loans for up to 5 years (including physical persons) are quite a regular practice for such institutions. Small loan companies offer much shorter terms of lending in exchange for expeditious processing of your application. Let's study this question in greater detail.

Terms of processing applications

Banks are famous for their cautiousness in regards to a big quantity of official papers a borrower has to collect. These include a statement of earnings and a property certificate (not for the purpose of the mortgage.) And we do not even mention some cases when a borrower has to look for guarantors or complete the formalities for a mortgage. The last task may take a whole week. In this case one should apply to a lower rank institution.

Companies, working in the field of consumer micro credit, bring forward the minimal terms of application processing as their major advantage. The decisions are taken practically in your presence that is an unquestionable advantage of addressing to such institutions.

Interest rate

They say a consumer is always pursuing a low service fee. As for a charge in the given context, it suggests an interest rate that is a consumer's fee for using a loan. Here we see basic conformity to the previous categories - the longer the possible terms are, the bigger the credit amount is, the longer your application is being processed and the lower interest rate you get. As for the positive decision, it's usually taken there, where you are least checked. In exchange you are only asked to provide your passport/ID information.

The choice of credit products

Different people search for different credit products. If you apply to a regular bank, you will be offered a wide range of services, depending on your needs.

Smaller companies practise much smaller assortment of credit services. As a rule they are:

- short-term loans for vacations

- make loans to people until they get monthly payment

- loans for urgent needs

Before you sign a credit contract, be sure you have studied not only all its terms but also the terms that competitors offer. Get acquainted with responses about the given loan institution from your acquaintances or the Internet. If you don't want to get into debtors' prison and acquire a low credit score forever, think twice before taking a consumer loan.

Friday, July 13, 2012

Credit cards have already been held responsible for getting many consumers into financial hot water. The truth is that it comes down to their management of their cards, rather than the cards themselves. But cards also provide a golden opportunity to rebuild financial reputations. A Chase +1 Student MasterCard is a perfect example in this regard.

Specially designed to guide students away from financial problems, the whole idea of student credit card approval might seem counter productive. After all, are students not more likely to waste their finances rather than be mature in their attitude? Actually, statistics show that most students are very mature in their money management.

The risk for those who take out a Chase credit card is real, of course, but the Chase +1 card comes with a veritable infrastructure designed to make life easier to manage and keep the cardholder out of trouble. That way, they can rebuild their credit history and keep it strong.

What Makes the Chase +1 Different?

The Chase +1 Student MasterCard is not a mysterious credit card that promises perfection to all users. In fact, it is the frankness of the card policy that makes it so different. Students do not need temptation to drag them into a worse financial situation, but they do need something with which to learn the intricacies of money management.

With this student credit card, approval brings with it a range of incentives, from an excellent credit line to no annual fee. It also comes with an introductory rate of 0% APR for the first 3 months. Once the introductory period ends, then a rate of around 14.99% is charged. Avoiding this large interest rate can be done by repaying the balance each month on time and not allowing the balance to build up.

As a Chase credit card, there are of course plenty of incentives, but the biggest one is to manage the card balance in good time, and avoid overspending. When that is accomplished, then the steady improvement in credit history can be significant.

Re-Building Credit Reputation

The task of rebuilding a credit reputation might not seem very likely for students, who have little or no history in repayments and money management. But everyone begins with a low credit rating - it is because there is no history to suggest that the repayment habit is good. The Chase +1 Student MasterCard fits into this condition perfectly.

With student credit card approval, students are given a place on the bottom rung of the credit ladder, and from there have a chance to build their own credit reputation. The card itself is a debit card in effect, with no credit actually provided. This protects the user, as much as the issuer, against the risk of credit debt.

But unlike many other Chase credit cards, this card comes with access to advice and information to help the cardholder to properly manage their spending. Remember, that APR reaches between 14.44% and 19.99%, so poor management will prove very costly indeed.

Value of Good Advice

The availability of advice to cardholders is a new development in the credit card industry, with users usually left to their own devices and either sinking or swimming in the process. But the Chase +1 Student MasterCard is an investment in consumers of the future, so helping them to get it right can only benefit the card issuer and the economy at large.

And there is no doubt that students are the consumers of the future, so by granting student credit card approval, it gives them ample opportunity to master the skills needed to properly use a credit card. And once that it done, better Chase credit cards are available to graduate to, with the certainty that card debt can be avoided.